Cloud Computing Stock Picks for 2012 (VMW, EMC)

VMware (VMW) is up 2% today and trading at $85 and change.  In 2011 VMW is down almost 4% but there's reason to believe this stock could return to greatness in 2012.  However EMC Corp. (EMC) looks to be the better trade if you are looking for cloud computing growth plus data storage.

Over the past 12 months VMware Inc (VMW) shares have traded between $74.04 and its 52-week high of $111.43.   VMW is trading 13.71% away from its 52-week low but the good people at Oppenheimer thinks we've seen the bottom in 2011. 

If you're lost, here's a quick explanation of Cloud Computing from SalesForce.com:

Today Oppenheimer upgraded VMware to Outperform and its price target to $100.  That implies a 16.6% gain from today's price of $85.80. The firm says the company is focused on high-growth markets with a clear market leadership position in virtualization, strong cash flow and solid fundamentals.  VMware shares to the average investor do seem a bit pricey, trading with a P/E Ratio of 55.9 and EPS of 1.5. 

Mastery prefers the option to buy EMC Corp. (EMC) for a cloud computing play, the stock trades with a 21 P/E and for $27.70 a share.  Recall that EMC is the majority owner of VMware controlling some 80% of the company.  EMC provides information storage, back-up and protection, management, security, information intelligence, data computing and virtualization technologies, services and solutions.

MASTERY Bottom line:

We concur with Oppenheimer's pt of $100 on VMW.

However we prefer to play it safe and go with EMC.  EMC has taking a huge hit in the last 6 months, is stock has fallen 21%. 

Heading into 2012 we think EMC is a great cloud computing play via VMW that also allows you to bank coin on the company's core services.

CHART LAND